​Approximately 157 million people in the US take advantage of employer-sponsored health insurance. Companies understand that offering this benefit is crucial in their efforts to attract and retain employees. While this perk is highly valuable to workers, the rising cost of insurance is becoming problematic.
 
Over the past 20 years, employee contributions for health insurance coverage has grown faster than gross annual pay. These increases in deductibles, co-pays and co-insurance have all had a negative impact on employees paychecks.
 
Fully-insured carriers are exacerbating the problem. These companies have gamed the insurance ecosystem so that they are  guaranteed a 15% profit every year. With additional pharmacy rebates and other arrangements, their profits continue to grow at the expense of the employers and employees they serve.
 
Employers, of course, are not blind to this reality and understand they need to offer a more stable plan. Towards this goal, more and more companies are looking to switch from their full-insured carriers to a self-funded option.
 
Self-funding is a way for employers to take ownership of their plan design and pharmacy rebates. While fully-insured carriers can change deductibles, co-pay and co-insurance at their discretion, self-funded plans allow the employers to determine the amount of their employees deductibles, co-pay and co-insurance.  Employers gain control.
 
Today, 23% of small employers (those with up to 199 employees) use self-funding, and that percentage continues to grow. While premiums for small and large employers are not dissimilar, smaller employers tend to pay more of the premiums in an effort to increase participation among their staff.
 
Group captives, a form of self-funding, is another good option. Group captives allow for the pooling of large claims to leverage the law of large number for small employers. Self-funding principles are based on paying known claims and buying insurance for unpredictable, larger claims.
 
Wellness programs, such as health risk assessments and biometric screenings, are also becoming more popular with employers. While these programs have no real impact on insurance costs, they go a long way in building strong employer-employee relationships and have value in attracting and retaining staff members.
 
In conclusion, fully-insured carriers offer a variety of benefits to employers and their employees, but their cost structurers are becoming untenable for both. As a result, self-funded options are becoming more attractive for those employers who are trying to control costs and help their employees keep a little more in their paychecks each week.
 
Don McCully runs Medical Captive Underwriters LLC, (www.medicalcaptive.com). Focus is lowering medical trend and spend for enrolled employers. ClearCaptive is a 50-state open access medical stop-loss group captive solution for middle market employers with 50 employees enrolled or greater
 

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Medical inflation continues to outpace employers’ annual revenue growth. As a result, both company profits and employee take-home pay are taking a hit. For middle market companies exploring cost-saving solutions for their organization, the rising price tag of health insurance is more concerning than ever. 

Self-funded and fully insured employer plan sponsors primarily access treatment through what the industry calls, “BUCAH” plans -- Blue Cross Blue Shield, UnitedHealth Group, Cigna, Aetna and Humana. Although BUCAH networks provide more transparency than the fully-insured market, they offer self-funded employers little to no cost mitigation support or advance service cost explanation.

For this reason, many companies are turning to “narrow networks,” a type of health plan where members receive care from a specific list of doctors, hospitals, outpatient facilities and labs. Narrow networks typically offer saving greater than a typical BUCAH plan can provide. While BUCAHs do offer narrow network options, we will look at those narrow networks with no BUCAH fingerprint.

Today, 7% of health benefit plan offerings in the US are provided through narrow networks. The majority are created by and for employers with more than 5,000 employees enrolled, according to the Kaiser Family Foundation. 

There are two types of narrow networks to consider: High Value networks and High Performance networks.  

High Value networks offer claims cost savings over carrier-owned PPO networks. These networks subscribe to the belief that the best medical providers perform more procedures and can provide both better outcomes and lower “volume” prices. Value based network offerings are available in all 50 states. 

High Performance networks offer the same cost savings, but take a more active role with their providers, regularly vetting them in an effort to improve service, treatments and patient outcomes. 

Stop-Loss Group Captives are a self-funded option that allow for the pooling of large claims to benefit smaller, middle market employers. Self-funding principles are based on paying known claims and buying insurance for unpredictable, larger claims. Combining Group Captives with a well-built narrow network benefits employers and employees alike. 

Don McCully runs Medical Captive Underwriters LLC, (www.medicalcaptive.com).  Focus is lowering medical trend and spend for enrolled employers. ClearCaptive is a 50-state open access medical stop-loss group captive solution for middle market employers with 50 employees enrolled or greater